Prediction of business confidence index based on a system of economic indicators

Abstract

One of the important indicators that characterize the economy of thecountry is the business confidence index. It is the basis for tracking the cycles ofeconomic dynamics and analysis of the country's business climate. Evaluation ofthis indicator makes it possible to predict the crisis phenomena that are occurringin the economy, and to develop possible ways out of difficult situations. On theexample of the five countries (Ukraine, Germany, Hungary, Slovenia, Poland) itwas also analyzed the possibility of constructing the business confidence indexbased on economic indicators, which characterize current economic activity ofthe country. For analysis, the quarterly values of economic indicators over thelast years were taken. The selected economic indicators based on crosscorrelationanalysis were ranked into three groups: coincident, lagging andleading indicators. Using coincident and leading economic indicators, the severalregression models of the business confidence index were built. On the basis ofthe obtained regression models, the forecast of business confidence index valuefor the next period is evaluated and the trends of its development are established.